Deforestation puts financial system at risk: report

US banks are actively financing a global epidemic of deforestation and land degradation that is putting the country’s financial stability at risk, according to a new report.

That means the Biden administration must give the same attention to reducing global deforestation that it has given to reducing the risk of fossil fuel emissions — or invite a creeping economic collapse, according to the consultancy’s report. Climate Advisors.

“It is clear that the financial sector’s links to deforestation should receive the same level of attention as foreign fossil fuel financing,” the authors wrote.

“The action of the Biden administration, the Federal Reserve and the Securities and Exchange Commission could have outsized climate benefits, while protecting American investors from absolute risk,” they added.

The Biden administration has repeatedly flagged the risk that climate change — and the economic transition from fossil fuels — poses to the country’s economic stability.

last May, President BidenJoe BidenSenior Hispanic lawmaker urges Biden to fast-track Ukrainian reunification in US Democrats’ conspiracy strategy to defy expectations and limit midterm losses On The Money – US suspends normal trade with Russia MORE signed an executive order directing the federal government to develop “consistent, clear, intelligible, comparable, and accurate disclosure of climate-related financial risks,” as reported by The Hill.

And in October, the Financial Stability Oversight Council – a council made up of the heads of key executive financial regulators like the Securities and Exchange Commission, Federal Reserve and Treasury Department – ​​found that “climate change is an emerging threat to U.S. financial stability.”

In December, the president signed an executive order demanding an end to federal funding for overseas coal plants, The Hill reported.

Meanwhile, the administration also joined more than 100 other nations in November in pledging to end deforestation by 2030, The Hill reported.

But so far, these initiatives have followed parallel and unconnected paths – leaving investors in the dark about the risky companies they might invest in, and the wider damage to the global economy from the destruction of the grassroots. nature on which it is based, the climate The advisors’ report argues.

Much of this danger is direct – the threat to the goods and services that rainforests provide and that American consumers and businesses rely on, from chocolate and coffee to rain and high-tech pharmaceuticals.

For a temperate country, the US economy is surprisingly dependent on raw materials from tropical forests. U.S. importers brought in $618 billion worth of tropical products in 2020, including $76 billion in agricultural products – a trade that affects nearly 40% of the U.S. economy, according to Climate Advisers.

But that only scratches the surface. According to NASA, the rain forests of equatorial Africa give rise to rains that water the American Midwest and atmospheric rivers that rise in the Amazon rainforest fall into key agricultural regions of Mexico and Texas.

And half of the world’s gross domestic product (GDP) — about $44 trillion in economic value — depends “moderately or heavily” on nature, according to a 2020 study by the World Economic Forum. The agricultural sector – the main contributor to deforestation and soil erosion – is also “among the most dependent on ecosystem services”, notes the Climate Advisers report.

The loss of pollinator species like bats, birds, flies and bees puts hundreds of billions of dollars of US agricultural production at risk, the report notes.

According to the World Bank, the collapse of key services provided by landscapes – from pollination to harvesting wild fisheries – could lead to a $2.7 trillion drop in global GDP by 2030.

Other threats are more immediate. According to a 2020 study in Nature.

Other services provided by natural landscapes include water storage and filtration; provide reliable river flow to hydropower plants; and serving as repositories of both chemical precursors to existing drugs and sources of new breakthrough drugs, the report notes.

The solution advocated by the report is simple: the administration should give the same attention to deforestation as to fossil fuels. That means focusing on more than emissions — although deforestation in 2020 emitted as much carbon dioxide as 570 million cars, according to Global Forest Watch — and requiring companies to assess and disclose the role deforestation plays in it. -even in their supply chains.

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Don F. Davis